CONFIDENTIAL
of West Germany and the United States would develop. TUC under- standing of the problems involved would be helpful in strengthening British policy.
3.
On détente, the atmosphere had unfortunately deteriorated since the CSCE summit conference at Helsinki where everyone had had the feeling of working towards common goals. Britain's relations with the Soviet Union remained good, indeed during a farewell call paid by the retiring British Ambassador, Podgorny had gone out of his way to stress that relations were now much better and were still improving. However, there seemed to have been a halt in improving relationships between the Soviet Union and the United States. This was due not only to the Middle East situation but to develop- ments in Angola and the failure to reach agreement in SALT. Dr Kissinger had intimated that he intended to visit Moscow in the near future to urge a decision on SALT. The attitude of the Soviet Union towards Yugoslavia and Portugal was also disturbing; but the major concern was the continuing conflict between China and the Soviet Union. It had become customary for visiting Ministers from the West to be subjected to a tirade by their Chinese hosts on the iniquities of the Soviet Union. President Ford and President Giscard d'Estaing had been the latest to experience this. Western Foreign Ministers would be asked to formulate a common position to deal with this situation. We should not seek to take advantage of it but, when in Peking, we needed to express a view on Sino-Soviet relations.
4.
On oil prices, as a result of his visit to Saudi Arabia and the Gulf States, Mr Callaghan was satisfied that he had convinced them that it was not in their own best interests to promulgate a further substantial price increase. Short of a Middle East war, such an increase should not now take place.
5. He thought that the TUC should know (in confidence) that it was hoped soon to put forward proposals to the Soviet Union on measures of disarmament which would secure a worthwhile reduction in force levels in Europe. It was not possible to give precise details because the allies must preserve their negotiating position. Complete agreement with our major allies was expected in the near future. The resulting agreement would make a material difference to the situation in Central Europe. The relative balance of opposing forces would not be altered but stability would be established at lower levels of armaments and at reduced costs.
6. A major domestic theme underlying our foreign policy was that all overseas posts should understand that their value lies just as much in trade promotion as in normal diplomatic activities. Business men and trade unionists were welcome visitors at our overseas posts, which understood their role in promoting British exports and trade.
2
CONFIDENTIAL
17